Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Which Way Wednesday – The Beige Book Boogie

The last Beige Book report was on September 9th.

At the time the Dow was looking toppy at 9,650 and we had poor consumer confidence numbers (just like yesterday) and poor consumer credit number (no change) and the book had very little "good" news to report (see my analysis) - Yet the market broke over 9,600 again that day and then took off all the way to 9,900 a week later.  At the time, we were looking for any excuse to go higher on the hopes that this earnings period will look like last one but have we now come too far, too fast?

It seems we are finally hitting the point of diminishing returns for earnings.  Expectations have finally gotten so high that even big beats aren’t enough to keep the momentum going. 

Last earnings Q, we were down from 8,900 in June to 8,100 on July 9th as companies began reporting and we had a nice, 1,000-point relief rally over the first two weeks of earnings.  This time, we went up an additional 500 points in the past two weeks, over our 9,600 line and that has been in anticipation of a repeat of last earnings but the circumstances are very different this time and it takes a lot to justify a 20% run off the July lows. 

Keep in mind that, looking at the sector charts, Energy, Materials and Tech are leading us.  Since semiconductors are simply another form of commodity – this is almost entirely a commodity rally in the midst of a recession with Consumer Staples, Financials, Health Care, Industrials, Telcom, Utilities and Transports all underperforming the rest of the S&P.  As I keep saying – if no one is shipping anything, how the hell can we be having a proper recovery?

The Beige book is an anecdotal view of the economy gathered roughly through the middle of October and we've seen no improvement in Jobs since the Sept 9th report, Cash for Clunkers ground to a halt and, just this morning, we got a horrific 13.7% decrease in the number of mortgage applications from the previous week.  That number includes "seasonal adjustments," without adjustments, morgage apps plunged 22.4% despite record low rates as government assistance begins to peter out.  The Refinance Index, also adjusted for the holiday, decreased 16.8 percent from the previous week and the seasonally adjusted Purchase Index decreased 7.6 percent from one week earlier.  The unadjusted Purchase Index decreased 16.7 percent compared with the previous week and was 3.4 percent lower than the same week one year ago.

Clearly the earnings reports that are coming in are still doing so mainly on cost cutting, not any underlying improvement in sales.  This week we had GCI with a beat but earnings are down 18%, some other notable revenue numbers are: PETS +5%, WFT -15%, AAPL + 25%, STLD – 54%, TXN -15%, WERN – 26%, EAT – 21%, CAT – 44%, KO – 4%, DRH – 15%, DD – 18%, GAP -5% (that's food!), ITW – 20%, LXK – 15%, EDU +26%, OXPS – 7%, BTU + 24%, PCP – 27%, SHW – 12%, UAUA – 20%, UNH + 8%, WU – 5%, CNI -16%, CREE + 20%, GILD + 31%, ISRG + 19%, NBR – 44%, SNDK + 14%, STX – 12%, STM – 23%, YHOO – 14%, AAI – 11%, APD – 21%, ATI – 50%, CAL – 20%, MAN (jobs) – 26%, SWK – 16%…  

So we get a general impression that sales are off about 15% from last year.  Last year's Q3 wasn't that great you know, the market collapsed in September so we already knew things were falling apart last Q3 so these are not tough revenue comps we are facing.  AFTER getting the revenue and profit numbers last October, the market went down considerably.  Should we be concerned?  Of course we should, any rational person would be but the markets are clearly IRRATIONAL right now so we are playing the market, not the data. 

We have to willingly suspend our disbelief in order to play these markets and our play mix, though still cautious, is reflecting that forced change in attitude.  Sure we still look at the data, but we do so while keeping in mind the great Bill Murray's advice - "It just doesn't matter!"  As fundamentalists, of course we believe it will matter, A LOT, one day, but we're well prepared for that turn.  Meanwhile, let's keep playing the cards we're dealt.

So what if no one is buying houses – they don't have jobs anyway so that's just 13.7% less people who are likely to default on their mortgage.  That must be good for banks right?  Goldman Sach's International Advisor, Brian Griffiths had the same advice as he spoke yesterday defending compensation in the finance industry as his company plans a near-record year for pay, saying the spending will help boost the economy.  “We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all.”  So don't complain about GS taking record bonuses less than a year after we bailed them out for wrecking the US Economy, they are only making this money FOR YOU! 

This is the same logic under which the entire market is celebrating our drastic reduction in the workforce.  For more than a decade, we've been shifting millions of jobs overseas and it made companies more profitable but there had always been a fear of a backlash against outsourcing if the companies slashed workforces as well.  Our little collapse last year took the stigma out of layoffs and suddenly they were in vogue – everyone is doing it and now the corporations have gotten rid of the "dead weight" of the American workers and now their plans are to focus more on the foreign consumers as these losers in America are all tapped out.  This is just the same sort of slash and burn capitalism that US multi-nationals have practiced globally for decades only now it's the US that's being cut loose as the corporations move on to greener pastures

As good little capitalists, we'll try not to care and we've been focusing our capital on companies that do not need the American consumer to succeed.  Yesterday's trade ideas for Members were a fun mix:  TBT up, ZION bounce, Dow down (rolling puts higher), ISRG flat (wide spread sold), HGSI flat to up, EDZ flat to up, SNDK flat (sold Nov $22s for $1.33 in a spread), JNJ flat to up and then, at 3:15, I sent out an Alert to Members for 6 earnings plays.  This is something we're trying to do every day, set up quick pre-earnings plays to make very nice one-day profits.  Of course it helps to get things right but that's where fundamentals DO come into play.  The trade ideas were:

  • STX has flown so I like the Jan $17.50s for .65, selling the Nov $16s for .60 (net .05).  My expectation is they disappoint but then hopefully recover on a Santa Clause run after earnings.
  • SONC June $10/12.50 bull call spread for net $1.20 (SONC is at $11).  Just a bullish bet. 
  • TUP is interesting as they are at ATH and probably worth it.  Apr $40/45 bull call spread is net $2.30.  3x of those and selling a Dec $45 for $2.30 gives you one for free!
  • APD likely to look like DD – will show good numbers but so what.  Dec $85/80 bear put spread is $2.20, might be a good chance to take out $80 putter on a spike up.
  • CAL is one I do like at net $13.80 so selling naked Dec $15 puts for $1.20.
  • MS Jan $31/32 bull call spread is at .40 is just fun.

We'll see how these go but they seem pretty much on track so far – 6 for 6 would be nice.  Ideally these are quick trades that pay a quick 20% or better and if we allocate, for example, $1,000 to each trade we can make $1,000 even if one play doesn't pan out and then we can turn that one into a longer spread that will pay off over time.  TUP fits our international theme of doing business outside the US while cutting dead weight and MS was obvious.  CAL we're happy to own long-term, SONC as well and STX and APD were both plays that come about based on our observations of their peers who have already reported. 

This is how we're playing earnings this quarter.  It's not so much about whether or not we like the company long-term, long-term investing is a very dangerous thing!  This is about getting the sentiment right and using our normal option strategies to take advantage of the imbalances caused by a combination of earnings volatility and a totally irrational market – it's a great combination from our side of the table! 

On the other side of the globe, Asia had a mild pullback this morning on no particular news – just following our lead yesterday.  "We have seen broad-based falls in line with Wall Street, but it's been fairly muted," said Marcus Droga, private client adviser with Macquarie Private Wealth. Mr. Droga said he expected subdued trade before a slew of major Chinese economic data on Thursday, including third-quarter gross domestic product and September figures for inflation, industrial production and fixed asset investments.

Moody's economy.com associate economist Alaistair Chan wrote in a report the data will likely show continued improvements in the key indicators. "The government is attempting to stem the rise in overcapacity, but this will be hampered by its inability to remove stimulus measures, given that the economy is so dependent on them," Mr. Chan added.

Europe is down about 0.75%, as of 9am, despite huge numbers from DB, who tripled last year's profits, making $2.1Bn for the quarter.  10% of the profits came from tax gains and that sent shares DOWN 3.5% despite the great numbers.  As I said above, we may be reaching the point of diminishing returns for earnings, where almost nothing is good enough other than grand slam home runs like AAPL and GOOG had. 

As usual, we'll be looking for a good DIA spread ahead of the Beige Book.  Unfortunately, it's a long way to options expiration so there are no "cheap" contracts to be had like we did last time, when we picked up a 150% winner.  We'll likely take advantage of morning weakness to establish a long position – after all, we're bullish now – or at least we're trying to be

 


Tags: , , , , , , , , , , , , , , ,

Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. AGNC / Phil – What do you think about their latest quarterly results posted yesterday?
    http://finance.yahoo.com/news/AGNC-Reports-182-Earnings-and-prnews-2106828581.html?x=0&.v=1


  2. Phil: what is the equivalent to covered calls when you have stock SHORT ?


  3. Suspending disbelief works great in watching sci-fi movies but at what point does it make better sense to wait on the sidelines for a cognitive framework that does model out well in todays’ market?  It seems like the whole market is just a dollar-index proxy, and other than the fed implied-put on financials and the one off success (AAPL/GOOG), everything else is simply a blind bet on continued liquidity-fed gambling by the banks using taxpayers’ funds to goose trading earnings while their carried assets continue to deteriorate.  I dunno….do we really need to do this?


  4. Phil
    Just an observation and I could be off the mark. Last night I noticed that the MS trade was on the dashboard in TOS and the time was 3.19 PM. Isnt the dashboard available to all TOS users?


  5. The economy is so dependent on stimulus can be demonstrated by the Nat’l Assoc of Home Builders running full page ads begging for extension of and increase in amount of home buyer tax credits.
     
    we are handout nation.


  6. SNDK may be worth a shot at short … bunch of downgrades (and upgrades)  see notable calls


  7. Pound the dollar; run up the stocks !


  8. Phil,
    Do you think gild is a good buy starting off by selling a put??
    thanks


  9. Buying SRS …


  10. Short COF


  11. Cap – you mean like buying SRS? or selling the put?


  12. AGNC/Trad – They look nice and strong and that dividend is 20% so, overall, a great play.  They are not too far off the $27.61 entry we had on the Watch List and buying at $28.72, selling the June $25 puts and calls at $7 net’s $21.72/23.36, which is just great since we’re in it for the dividends.

    Covers/RMM – If you are short on a stock you can just sell puts to cover. 

    Needs/LV – We don’t "need" to do anything but cash is not your best option at the moment as it gets less valuable every day.   Don’t forget that when I called for cash last year around this time, it was because stocks were getting cheaper and our dollars were getting stronger so cash itself was a good position to be in.  That’s not the case now, if you wait this out and stocks move up another 20% and THEN infaltion takes hold and they move up 20% a year as the dollar goes down the drain – when will you finally get in?  Better to be more or less neutral and move with the market at the moment.  We can make money in both directions – even on the same day! 

    MS/Chakra – You are right, I put up the MS trade 5 mins after posting our trades here as I thought that was the most liquid of the 6 and additional players wouldn’t bother us but it is very likely that they are the ones that screwed up the spread.  I’m just not used to being so influential….   8-)

    Same old Breakout levels today:  Dow 10,200, S&P 1,100, Nasdaq 2,200, NYSE 7,250 and Russell 623.

    Our must hold levels remain:  Dow 10,087, S&P 1,096, Nasdaq 2,173, NYSE 7,204 and Russell 623 and we want to see SOX 338 and Transports 1,989 before getting more aggressively long. 

    NOT going overboard Monday saved us a lot of pain as we dropped 120 into yesterday morning from there.  Now it looks like we’re heading back up for another run because all that bad news today didn’t matter at all. 

    Sadly, we’re up too fast to take a good DIA call play into the BBook.  At the moment, I’m not liking the spread but I would like the $99 puts, now $1.30, if they hit $1 on the run up


  13. Look at FAZ.  Have you ever seen such a thing?  Looks like they might be stepping in today to put an end to any realism creeping back into the market.  They need to stamp it out quickly.  And they have been for a long time now.


  14. Man the dollar got grused this morning, down 1.4% to the Pound ($1.66) since 3am.   We just bounced off $1.50 to the Euro and Japan is clearly supporting ups at 91 Yen as we no longer move from that spot for very long. 

    GILD/Harip – Yes, you can sell the Dec $43 puts for $1.15 as net $41.85 is an attactive entry but, if you like the stock, you can also buy the May $41 calls for $6.40 and sell the $47 calls for $3.20 which is net $3.20 on the $6 spread and, if it heads lower, you can THEN sell maybe the $40 puts for $3+ (now $2) and that puts you in at $40 with the loss from the bull spread erased at worst

    Volume 25M at 10 – lowest all week and best performance all week…

    FAZ/Matt – LOL, that is funny.  I didn’t realize everything was so great in the financials.  FAS up to $88 – very impressive. 

    Oil flew up to $79 again (gold $1,055).  Inventories at 10:30 and they expect a net flat number but I think we get a bigger build in crude as they had to dump a lot of barrels this week at the NYMEX. 

    SNKD going a little too high for our spread but no point in adjusting yet.  TUP is flying, APD right on schedule, STX and SONC perfect, CAL perfect, MS better than perfect (we were too conservative). 


  15. Hi Phil,
    I sold 1 Nov 25 Put on AGNC naked for .80 on 10/13 it is now .15. I wouldn’t mind owning the stock net 24.20 (and then selling more puts and calls) but I also feel like I should take some profits off the table and not risk an ~80% gain. I cannot make much more on it by holding another 30 days.
    Any thoughts?


  16. Matt – Please try to keep in mind that It just doesn’t matter!  You will feel much better once you do…

    Selling MS $35 calls for $1.10, just need something to trade short this morning


  17. AGNC/Roth – You are 100% correct.  You have an unlimited downside risk for .15 – that’s not very good.  Now you can sell the March $25 put for $1.40 and not own them for net $22.95 if they get put to you but if you pick up that $1.40 and the .65 you get now, that’s $2.05 against $12.50 in margin or 16.4% 5 months – even better than the premium you get owning the stock!

    AAPL cranking with the Cramer crowd.  I like them too much to bet against them but $204 is a good spot to go short by selling the $200s at $8.


  18. Thanks Phil.
    Do you follow the dry shippers (GNK, DRYS, EXM etc)? Any thoughts/recommendations for long term? They seem to gaining some strength in the last couple of days.


  19. Phil, getting an error on the RSS feed, even after I refreshed the page with my account info.  I’m able to see this whole page, so not sure why the error. 
     
    WARNING: array_unique() [function.array-unique]: The argument should be an array in line 570 of file psw_auth.php
    WARNING: Invalid argument supplied for foreach() in line 571 of file psw_auth.php

    You cannot access this feed. Upgrade to a Premium Membership today! Please contact us if you have any questions.


  20. now it appears to be working…..


  21. Bank of England Governor Mervyn King steps up his call to break apart Britain’s largest banks: "The massive support extended to the banking sector around the world, while necessary to avert economic disaster, has created possibly the biggest moral hazard in history," King said in a speech (.pdf) late Tuesday.

    ZION doesn’t know they are in the banking sector today.   Actually, they have usually been a great directional indicator but earnings were disappointing so maybe we need a new canary now.  Then again, maybe they are trying to tell us something so selling the FAZ $19 puts is kind of fun at $1.80.  This, like AAPL and MS, is a risky play as we’re betting the market will double top where it was on Monday.

    VIX at 20!  Down goes VIX, down goes VIX!!! 

    Shippers/Trad – I’m not entirely sure anyone is really shipping anything so I haven’t been too excited by the shippers but TNK, CPLP and SB are on the Watch List those are the ones I’d play as they seemed the best values to me. 

    Oil inventories:  Oil up 1.3Mb (low), Gasoline down 2.3Mb (high) and Distillates down 800K (in-line).   It shows a little demand creeping in but they’re not going to be happy about the 1.3Mb headline build as it’s not really enough to support oil at $80


  22. aapl broke through 2007 high


  23.  What about TZA as another way to play a double top outlook and sell off after the book is released ?   It is down 4.2% already today.


  24.  OIH going up like crazy. Any thoughts on that Phil.


  25. SRS … bought it in the 9.40s; sold some in the 9.50s; may buy some back.


  26. REIT guy comes on pumping REITs like SPG.   Nobody is listening or buying.  No volume before during or after he went on TV.   Moves only w/ IYR URE SRS etc.


  27. Speaking of RE, saw article yesterday how Morgan Stanley was going to give back the keys to Barclays on a $4B portfolio of office real estate it bought near the top … Crescent Real Estate.  What a disaster.


  28. Hi Phil: I thought  S& P had a " going concern " rating on AGNC ? Am I wrong ?
    dflam


  29. Phil,
    Could have used the Foreman/Frazier for the dollar as well…


  30. Bank of England Governor Mervyn King looks like a genius compared to our House and Senate Finance Committees.  They are always trying to have their cake and eat it, too.  When is someone going to just stand up and knock one of those fat, greedy, ass grabbin Republican f-s out?
     
    It follows months of drift and closed-door negotiations with bankers and Republicans who are fighting to protect profit margins from the Democrats’ drive for tougher rules.
     
    "We’re going to reform our financial regulatory system because we can’t afford to have wild risk-taking on Wall Street," Obama told a Democratic fundraiser in San Francisco late on Thursday.


  31. Phil what do you think of Apple April $250 calls?  I’m not really in the position to write puts or calls.  Joined hoping to get some good plays on buying them.  Thanks Phil…


  32. RSS/Java – I’m glad it’s working because I haven’t a clue how to fix it!

    So much for oil not liking the number, they just hit $80 anyway…  Supply and demand is not even close to being a factor in commodities.  Imagine if we actually start using stuff again – $200 oil, here we come…

    TZA/CMC – I like it!  You can sell the $10s for .50, that’s got a good cushion.  Also, the Apr $9/10 bull vertical is .40, maybe .35 and makes a nice overall hedge with a 150% payout.  You can risk $4K, get $10K back if the market dips and pull it out at $2,500 (.25) if we keep going up so that’s risking $1,500 to make $6,000, which makes for a good cover.

    OIH/Ken – Unfortunately, not many earnings from that group yet so they can go where they want.  I’m already short (sold $125 calls for $6 avg) so I’m just watching the fun at the moment.  Obviously I like selling the naked $130 calls for $5 but I was wrong on the $125s so take that idead for what it’s worth….  8-)

    IYT on drugs at $73, Dec $77 calls are good IF they can be bought for $5.75 ($1.75 premium) or less.  Spread is $5.30/6.20

    REITs/Cap – Madness!

    Sector ETF strength after one hour: Coal– KOL +2%. Internet– HHH +1.7%. Gasoline– UGA +1.6%. Clean Energy– PBW +1.6%. Regional Banks– RKH +1.5%. Tech– XLK +1.3%.
    Weakness: Biotech– BBH -0.3%.

    Petroleum Inventories: Crude +1.3M barrels vs. consensus of +1.5M. Gasoline -2.2M vs. -0.85M. Distillate -0.8M vs. -1M. Dec. crude moves to par, flat at $79.05.

    Fed’s Janet Yellen warns that the trillions pumped into the global economy to ease the credit crisis could trigger a new asset-price bubble. "We certainly need to be on top of understanding what vulnerabilities are developing in the financial system," she said Tuesday evening.  COULD TRIGGER???

    State Unemployment Rates: Regional unemployment rates were little changed in September. Twenty-three states recorded M/M unemployment rate increases, 19 states registered decreases, and 8 states saw no change. Over the year, jobless rates increased in all 50 states.


  33.  Phil,
    As a place to store some cash what do you think of a CYB april 25 call for .70 ask? The delta is .64. Only 412 o.i.


  34. $sndk $23 puts for 0.80


  35. AGNC/Dflam – Sure, they’ve been under that since March and of course they are risky or you wouldn’t be able to buy them for about 1.4x book value.  This is the same logic as buying C at $1 or BAC at $5 or AIG at .50 – they have so much upside potential if they DON’T fail that it’s worth taking a chance.  The idea of the watch list is to pick a diversifed group so you can allocate small amounts to a lot of stocks that can easily double.  If you manage your downside, you don’t need too many winners to make up for the losses.  

    Dollar/Boonie – The difference is, no one expected Frazier to go down..

    Reform/Matt – Hey, Obama better be careful.  Kennedy was calling for that kind of refrom before "THEY" replaced him with a guy they thought would be easier to control.   There’s a lot of similarities there too as Johnson was the old white guy, meant to give some experience to the Kennedy ticket but Johnson was a hard-ass and got some major liberal religion hanging out with Kennedy but he was a war guy, which is what they wanted most of all at the time…

    AAPL/Lolo – You can only buy calls?  No selling puts or nothing?  That being the case, I’d stay away from AAPL or any stock that’s alread had a recent run.  If you can only buy naked calls, your best bet is to wait for an overreaction to the downside to give you a bargain entry.  Something like GILD when they stop falling or BA if they head down a bit more.  The best plays are the ones wheere someone misses earnings but you are pretty sure it’s just a one-time thing.  ZION is a good one for that – the 2011 $15s aren’t too bad at $5.50 ($3 premium) but look how much better that play is if you buy the $12.50s for $6.80 and sell the $17.50s for $4.50.  That puts you in a $5 spread for $2.30 so you make 95% before the $15 calls are even close to breaking even.  Buying calls and paying premiums is gambling, pure and simple.  If that’s all you can do, your chance of being successful is extremely limited as we make most of our money selling options, not buying them.

    CYB/OldG – They are pegged to the dollar so what are you going to gain?  The only way they go up is if your cash goes up anyway.  It’s very thinly traded and you’ll have a very hard time getting your money out.  It will only cost you .40 to bet TLT doesn’t go lower with the March $92/93 bull call spread.  You can put $1,000 in that and it pays $2,500 if TLT doesn’t go down and you can pare that with $1,000 worth of TBT March $46/47s at .40 too, which pays $2,500 if TLT DOES go down.  Of course, that’s IN THEORY but it’s a good theory and, obviously, if at any point you find yourself up 10% on the two, you can cash both out and just wait for a reload opportunity.

    CS – Crazy foreign Gang of 12 member at $60!  Selling $60s naked for $2.80 is a nice play.  Sorry to be bearish again but this is getting too silly


  36. The Fed buys $1.05B in Treasurys maturing 2027-2039 of $6.958B submitted – the second-to-last operation in the $300B program it started in March. Treasury prices were down across the board, with the 30-year yield +0.06 to 4.22%; 10-year +0.06 to 3.41%; 5-year +0.07 to 2.36%; 2-year +0.05 to 0.96%.

    The House Financial Services Committee approves a motion which would make it easier for state regulators to preempt federal consumer protection laws with their own. Critics of the so-called Watt-Moore measure argue it would stunt growth by forcing banks to comply with 51 discrete sets of regulation.


  37. Matt/Greedy   :)


  38. There is absolutely no volume in ICE and they are taking every advantage of that and pushing it up.  There were only 600 shares traded 5 mins ago!


  39. AAPL – I was off target before but nice DD on the $200 calls sold at $9.50 now (was $8), 1/2 back out at $8.75 or roll to Dec $200s at $12.40, which is great money but will take longer to win. 

    ICE/Matt – $110/$105 bear put spread is net $2.30.


  40. Interior Secretary Ken Salazar says the government will take a close look at a favorable deal that his predecessor granted Shell (RDS.A) just days before Bush left office. Former Interior Secretary Gale Norton now works at Shell.

    What pulled the rug out just then? 


  41. AAPL….Sold Nove 210 calls for 4.10.  Bound to be a short =term pullback to make these profitable.


  42. Matt, perhaps a part of the difference is Mervyn King isn’t an elected politician.
    If we could find a way to have less of those the world may be a better place. As a start (and only slightly tongue in cheek)  I propose replacing the senate elections with randomly selecting citizens at birth.
    This system of having the democratic party responsible for keeping the democratic party honest is rubbish. Equally true if republican.


  43. Why such a pullback on RIMM?  Anything specific?


  44. GOOG could also undergo a short-term correction.  Considering naked calls above 565 to 570


  45. Hi Phil APPL Just want to confirm you trade sugestion to sell Dec call 200 for 12.40 stock is on fire now up 6.62 at 205.35!!!


  46. Noon volume 78M, about avg.

    VIX down 3% on a day the market opens 40 points lower, gains 110 points and then drops 50 points in the first 2 and a half hours…

    Selections/Steve – In England they have the House of Lords, which is like the Senate and only about 1/3 of the positions are elected and the rest are titled.  Among the titled are the clergy and, of course, the wealthy but many titles are hereditary.  It’s kind of crazy but it’s a cool system and you get a lot of interesting people in office.  One thing about British government is you don’t see people talking to empty rooms very often, those guys pack the rooms and take their debates very seriously.  This is House of Commons I think but I WISH they would do this here.

    RIMM/Iflan – Something strange is up, lot’s of sellers started showing up.  Maybe bad news coming, maybe the BBook is going to be bad…

    GOOG/Iflan – playing with fire!

    AAPL/Yodi – Yes as it’s $7+ in premium but I was more saying it as a roll of the Nov $200 calls if someone wasn’t willing to do the DD at $9.50.  No need to do any now as AAPL is finally calming down. 


  47. Phil Rimm holding march 10 put 60 short still .35 in credit should I buy them back ?


  48. V up for stupid reasons as they raised their dividend 19%, which sounds great until you realize it was only 0.6% to start with.  Cramer also just put out a note on TheStreet to BUYBUYBUY V with a p/e of 40 so, you guessed it, I like selling the $75 calls for $3.65. 

    All these naked call sales are out asap.  Quick 20% gains on these are great!


  49. Hi Phil BAC is slipping anything to act about


  50. RIMM/Yodi – I don’t get it?  You sold the March $60 puts and you are up .35?  I would ride that one out, RIMM is great to own at net $56 but next time you are up 50% – take it! 

    BAC/Yodi – IN the $100KP, no change as we sold the Nove $17.50 puts and they are about even and, otherwise, there’s no reason to shift.  As a new play, I do like selling the Dec $17 puts for $1.

    GMCR FINALLY looks toppy at $77.50 (now $76.35).   I love selling the $80 calls naked for $3.30 as that price is just silly.  Dec $85/80 bear put spread is $3, that’s nice too.


  51. Phil, I have GILD stock, Nov 45 put naked and Nov 46 call naked.  I am up 65% on the call with this move down.  What do you think of taking the gain on the call and reselling it on an up day.  This is a stock I want long term for a continuous buy/write.  Thanks,


  52. Hi Phil hold the April Bull spread 19/22 stock trading now for 24.66 I am still in the money any change you sugest? Thanks


  53.  Ouch … just got back to the screen and saw CAL …. sold the 15 dec putters at 1.2  …. as you said before, something you want to own anyway.   Pls keep this one in mind as time goes on so we can work on repair or replenishment strategy …. no big deal, just want it on your radar.


  54. Hey Matt…. That caffinated "extra strong" Starbucks is really working for you today – LOL


  55. phil – I am short an FCX Nov 75 call sold at 5.50 (rolled about even from Oct 70 call sold at 3.60). What would you do with this? I’m getting buried by this one :-(


  56. RIMM …. in the comments from the value investing congress above; one of the hedgies there was bearish on RIMM; that could be playing a role …


  57.  BTW … the spreads on the TZA april options are ridiculous.   Even inputting a spread order shows nowhere near .40 for 9/10 in april … looking for a better play


  58. RIMM …. in the comments from the value investing congress above; one of the hedgies there was bearish on RIMM; that could be playing a role …
     
    There


  59. There goes the dollar; new low of day …


  60. Phil,

    I know I’m late but around 11 am you wrote about TZA " I like it!  You can sell the $10s for .50, that’s got a good cushion. Also, the Apr $9/10 bull vertical is .40, maybe .35 and makes a nice overall hedge with a 150% payout." Could you expand a little on the trades here – I’m having trouble interpreting the jargon from the numbers I see at 1pm – and TZA has been a bummer for me so far this year. When you don’t mention calls or puts explicitly I understood you to mean "calls" but the numbers make puts more likely – and the also what is a bull vertical – is that selling 2 calls at different strikes?


  61. Wow, all 4 Fast Money guys recommend buying into the close!  Geithner trashed the dollar at 12:20 with this one:

    Treasury Secretary Tim Geithner says President Obama is focused on supporting a fledgling economic recovery, and will have to deal with the ballooning budget deficit later. "For there to be a recovery that’s self-sustaining over time … people have to be confident that we’ll bring those deficits down over time," he told Reuters. "Right now, the overwhelming imperative we face is still to make sure that we reinforce this nascent recovery."

    So stimuls and more stimulus for EVERYONE!  Meanwhile, this is a crap move on such a major statement so far. 

    DDM $41 calls at $1.40 make good upside cover if you feel you need it for a big Dow move up but, to me, this explains the sudden bounce and, so far, it isn’t enough to reallly turn things and then you have to wonder what else it will take to keep this rally going? 


  62. Whats the problem with RIMM…..AAPL and its global dominance…RIMM has some 60 dollar price targets and they did give weak revenue guidance and AAPL on the other hand cant keep up with demand…..


  63. Phil – TLT and TBT I had trouble understanding how this earlier trade suggestion doesn’t just cancel’s each other out – how can there be a gain?
     It will only cost you .40 to bet TLT doesn’t go lower with the March $92/93 bull call spread.  You can put $1,000 in that and it pays $2,500 if TLT doesn’t go down and you can pare that with $1,000 worth of TBT March $46/47s at .40 too, which pays $2,500 if TLT DOES go down.  Of course, that’s IN THEORY but it’s a good theory and, obviously, if at any point you find yourself up 10% on the two, you can cash both out and just wait for a reload opportunity.


  64. Hi Phil holding long JPM march 10 call at 5.76 ,Nov call 45 short sold for 2.50 now 2.01,  41put short   sold for 1.85 now 1.21 shall I buy back the Nov call Thanks ?


  65. rimm is only down 35 cents; what’s the big deal ?


  66.  Phil, OIH crazy move with oil/dollar etc. Should we DD on the short calls or are we looking at 85 oil as GS called a couple months ago.


  67.  Phil,
    Do you think  DIA will accelerate after 3pm? If so what to buy to ride it?


  68. Hey don’t worry, $80 oil won’t harm the economy, will it ?
    After all, high oil prices had no affect last year either, right ?
    Don’t worry, be happy.


  69. Yeah, it’s looking like oil is heading much higher. It’s due for a consolidation/pullback first, but it’s just following chart and dollar moves now.  If and when it gets back over $100, there will be lots of pro forma hand-wringing from officials about the evil speculators, but it will come to nothing just like last year.


  70. Phil

    I am long 4 BSX May $8 calls – they are down 47%    Do I roll down to May 6 or to Jan 11 $7.5 – what do you think? Or am I being impatient again. Still trying to find my feet with these.


  71. I’m with Cap, should I really be scared of RIMM? Im holding a short put on the Nov $65


  72. I dont know why but i just have this feeling that the markets are headed for a selloff, oops never mind it was just gas

     A Goldman Sachs International adviser defended compensation in the finance industry as his company plans a near-record year for pay, saying the spending will help boost the economy.
    “We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all,” Brian Griffiths, who was a special adviser to former British Prime Minister Margaret Thatcher, said yesterday at a panel discussion at St. Paul’s Cathedral in London. The panel’s discussion topic was, “What is the place of morality in the marketplace?”


  73. HI Phil OIH still running up still holding the short  4call of 125 sold for 5.77 wish to roll this call to 135 and sell  5 or 6 120 put for 2.85 your advice please thanks


  74. GILD/SS – That’s fine to do as a bullish move but just be ready to re-sell maybe the Dec $45s if things go south from here as you don’t want your put to kill you.

    $19/22/Yodi – I’m going to guess SKF and I’d hang onto that one.

    CAL/CMC – It’s really not an issue until the putter is below 50% premium and, even then, we’re talking Dec and those can be rolled to March $11 puts, now $1.05 so hard to get worked up…

    FCX/Roast – Yes, they are getting annoying but that’s because copper shot up to $3.02 today (from $2.84 yesterday) and that’s not likely to be a daily trend.  Keep in mind that ou sold them for $5.50 and they are worth $6.90, the rest is premium.  If you really think FCX is going to go up and up and up and never come down, you can sell the $80 puts for $3 and use that $3 to roll the callers up to the $80s but, until that seems like a great idea to you, then you are not bullish enough on FCX to worry about the apparent value of the calls you sold.  Also note that the $8.35 $75 calls can be rolled to the Jan $80 calls, now $7.85 for .50.  Whenever you can buy $5 for .50, life isn’t so bad…

    VIC/Cap – I was supposed to go to that again but last year they posted everything up and it all boils down to 2 dozen powerpoints so what’s the point of sitting there?

    TZA/CMC – Don’t even do it if you can’t get .40, not worth the bother but if you leave it GTC you might be surprised.  Actually, I just filled that spread at .40 in 15 seconds on TOS.

    This is insane, the dollar is down 2.5% since Oct 1st! 

    TZA/Red – That is buying the $9 calls and selling the $10 calls for a net of .40.  That’s what a bull vertical is.  If TZA finishes over $9 at April expiration (now $11), then you get $1 back, which is a 150% profit but generally I’ll ask for .60 right away and take it if they give it to me as you can always find another spread and a quick 50% is golden.

    RIMM/Kustomz – Well it’s their market share that AAPL is chewing up and how many corporations had annual Blackberry service contracts on the last 6M people that got laid off that are running out month by month on them?

    TBT/Concreata – Because they both pay 150% and, in theory, you shouldn’t be able to lose both although it is slightly possible to win both on a total flatline.  So you lose .40 and win .60 whichever way it goes.  In theory!   Sadly, it takes 5 months to play out but if this works, we’ll be looking for more…

    JPM/Yodi – I think they are fairly valued here.  I don’t know what your March strike is but why would you pay 40% of the March call’s value just to increase your downside risk?  You’ve got another $1.21 coming to you from the put if JPM goes higher so you will be able to roll the $45 caller to the Jan $50s easily.  If seeing JPM go to $50 against your March caller isn’t satisfying enough for you then sure, go ahead and gamble but there is something to be said for not being greedy.

    OIH/Ken – Oil over $80 is not a good DD point on OIH.  If this keeps up we’re better off moving to a short straddle like the Dec $135 calls ($5.50) and $125 puts ($4.30) but we can also go to the Jan $140 calls ($5.10) and $120 puts ($4.20) so STILL not really in the mood to panic.  Sorry….

    DIA/OldG – See DDM in last comment but I’m not buying this move, also per what I wrote in the last comment. 

    $80 oil/Cap – No, no worries.  Nothing puts non-confident consumers (per yesterday’s poll) in more of a shopping mood than getting $100 worth of gas on the way to the mall!  8-)


  75. Sorry Phil the stock is DBC,
    yodi
    October 21st, 2009 at 12:42 pm | Permalink  
    Hi Phil hold the April Bull spread 19/22 stock trading now for 24.66 I am still in the money any change you sugest? Thanks


  76. RIMM my prediction is everyone will have an IPhone, thats 3.7 billion mobile phone users….my price target for AAPL is 36000 a share….will keep you updated O and lets keep this just between us

    Rumors
    There are reports GOOG will release its own smartphone

    The new phone was revealed by Northeast Securities analyst Ashok Kumar who claims that Google will launch the self-branded phone this year but, in an unexpected though not completely surprising move, the phone will be available unlocked through the retail channel. This comes in stark contrast with the usual way of doing things in the industry as phone makers usually rely on deals with the network operators to sell their phones bundled with a mobile plan.

     


  77. Phil In your earlier comment "All these naked call sales are out asap.  Quick 20% gains on these are great" you mean 20% on credit from naked sale or 20% of the margin required…..


  78. Hi Phil, UTX, possible short?  Thank You


  79. Where is Newton when you need him?  This AAPL needs to drop.


  80. going long srs again


  81. Phil,

    I got the TZA spread for net .65 but there is nothing quick about it if I have to wait until April to catch $1 – what am I missing?


  82. The way I see it we (US) are in a death spiral.  Bernanke doesn’t want to raise rates for fear of killing the economic recovery.  But oil, and alot of other $hit, is spiking because the Fed is printing too much money.  Obama needs to show resolve in lowering the deficit but he can’t because he doesn’t want the economy to slip into further recession.  He will take the easy way out.  Which is to say he will simply spend more money we don’t have.  He can’t stomach the pain this country has to go through to get back on its feet.  He will simply spend, spend, spend his way out of office in 3.25 years.  He needs to reassign Volker from being the jobs czar, whose friggin idea was that!, and make him the deficit czar.  But of course he won’t.  Volker is really the only person I can think of who has the internal fortitude to do what is right.  Him and Dylan Ratigan.  And that chick tasked with overseeing the TARP funds.  Put them all in charge.  Volker broke the back of run away inflation.  That takes steel.  Who made him the Fed chairman anyway?  Oh yeah.  Jimmy Carter.  May God bless his soul and put him in the chair next to Jesus when he leaves this f-ed up place. 


  83. Sector ETF strength: Gasoline– UGA +4.2%. Oil– USO +3.5%. Heating Oil– UHN +3.4%. Coal– KOL +3.2%. Commodities– DBC +3.1%. Gold Miners– GDX +3%.
    Sector ETF weakness: Pharma– PPH -1%. Regional Banks– KRE -0.9%. Semis– SMH -0.8%. Biotech– BBH -0.8%. Transports– IYT -0.5%

    BSX/Red – Yeah it’s way too early to panic.  I assume you bought May to give yourself time to recover from a poor report and, well, here is your big chance!  You can sell Nov $9s for .20 and they can be rolled to the Jan $10s and that would be $2.20 back so not a bad idea while you wait.  You could also sell the May $9s for .80 and use that to roll down to the $7s (+.65) and that gives you $2.15 back at $9 but, since you are considering rolling, I’d go for the sale of the Nov calls first and then worry about moving if the stock recovers – that should be your biggest worry…

    OIH/Yodi – See above comment to Ken.

    DBC/Yodi -  Well that was designed to be our main insurance against a commodity rally and here it is.  Right now it’s 2/3 of max value but, of course, we’d like to get at least $2.50 to close it.  If this is a heage, let it hedge but if you took the spread (up 35%) or the leaps (2012 $20s at $5.80, up 20%) as a straight trade, then it doesn’t hurt to take some off the table or set stops.

    Someone is runnining tech leaders, AAPL and SNDK got surges of buy orders all of a sudden.  This market just refuses to go down

    DDM $41s still $1.40 and BBook out in minutes.   DIA $99 puts STILL $1.30, can’t get a good price…. 


  84. Beige Book:

    • Stabilization or modest improvements in all districts.
    • Philly still slow.
    • Real estate "weak or deteriorating"
    • Consrtuction weak
    • Weak or declining loand demand, deteriorating credit quality.
    • Manufacturing stronger
    • Wages flat.

    I don’t see how they think this is good but whatever – I’ll read more in a while.


  85. I guess I’m not being completely fair pinnning all of that on Obama.  He’s the president so it’s mostly his fault.  But Congress is even more pathetic.
     
    Kustomz, thanks a bunch for that tip on aapl.  I know you want to keep it on the dl but I hope you don’t mind if  Iwhisper it to my neighbor this afternoon.  He drives me up the friggin wall.  But don’t get me wrong, lord, I luv ‘em.


  86. If anyone didn’t enter CAL before Dec 13′s for $1 look nice (to me!)


  87. AAPL/Kustomz – I think you are missing the Cramer factor where people get 5 IPhones each so they have one in every color!  That’s closer to 20Bn users I think…  That’s why GOOG is putting money into space exploration, they need to search the universe for more eyeballs!  8-)

    20%/Magret – 20% profits.  You sell for $5, you buy back for $4, that’s 20%. 

    UTX/1020 – They are more of a buy on the dip for me. 

    AAPL – if you are worried about your callers you can always sell the $210 puts at $7.20 to stop the losses.  Of course, you won’t make anything on a pullback either but it’s not a bad thing to do while you wait for things to calm down and both the puts and the calls can be rolled to make a wider spread as time goes by

    SRS Cap – Good call but I’m short enough at the moment.

    TZA/Red – I filled that spread for .40 no problem and I suggest you switch brokers as I would have been thrilled to sell that spread to you for .65 today.  As I said, I put in an order to sell right away (though not fast enough to catch you it seems) for 50% more than I paid for it in case some sucker comes along and buys it.  That’s the quick money!

    Matt, I sense that you are not meditating…

    CAL/Steve – I agree, selling Dec $13 puts for $1 is a great play and that’s a 2x roll from the $15 puts if you are in them.


  88. Not knowing where all that TARP money went is driving me a wall, anyone have Blankfein’s number?

    GOOG just goes to show how much money these guys have, the Gov did a great job in saving the uber rich mean while the i hate the term "Joe six pack" has to sell his under garments to make his mortgage payments.

    One of 2 things happen this afternoon, we solidify the move past 1100 or they sell it off to 1090 saving it for another day. From what i see they keep jamming it up, if we see GS go + its a go for 1100

    The riddle of steel: the true thing that is forged and unbreakable is the will. Steel breaks, Flesh grows weak, but will is unbreakable.
    MOSCOW, Oct 21 (Reuters) – Russia’s Magnitogorsk Iron and Steel Works (MAGN.MM) produced 31 percent more steel in the third quarter than in the second, the company said on Wednesday.
     
    Magnitogorsk, Russia’s third-largest steel producer, said in a statement third-quarter crude steel output was 2.83 million tonnes, compared with 2.16 million tonnes in the second quarter.
     
    Output of finished products rose 36 percent in the same period to 2.60 million tonnes in the second quarter.
     
    Russian steel makers have seen production rebound in the third quarter as demand returns to levels close to those seen before the financial crisis.
     


  89. When one does the CAL trade, 2 for 1, can that be entered as one trade or do i roll then sell 2 more? My brain’s not figureing out how to enter a price per contract.


  90.  Is there any reason to roll CAL now ?   It seems we have time on our side and can roll in another week or so to see how CAL settles out as well as the rest of the market.   We could see CAL at 13 in a few days for example.


  91. I am in the CAL Dec $15 puts. Does 2x roll mean selling twice as many $13 puts as $15 puts


  92.  Phil,
    Any volatility play for today’s earnings? One more ISRG will be great :-)


  93. Matt… That Starbucks coffee (caffinated of course) is really kicking in. Your comments re deficit  spending is right on, and you could do the job as well as Volker, who is nearing retirement.  Let me know if you accept, and I will then reverse my TBT long position.


  94. Phil, what do you think of this play for ebay before today’s close? buy dec 26 call & put, sell the nov 26 call & put.


  95. Beige Book In-Depth look:

    Prepared at the Federal Reserve Bank of Richmond and based on information collected before October 13, 2009. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.

    Reports from the 12 Federal Reserve Districts indicated either stabilization or modest improvements in many sectors since the last report, albeit often from depressed levels. Leading the more positive sector reports among Districts were residential real estate and manufacturing, both of which continued a pattern of improvement that emerged over the summer. Reports on consumer spending and nonfinancial services were mixed. Commercial real estate was reported to be one of the weakest sectors, although reports of weakness or moderate decline were frequently noted in other sectors.

    Already this is not as good as CNBC is spinning it.  They said stabilization AND improvements in all sectors – this is not at all what it says…

    Reports of gains in economic activity generally outnumber declines, but virtually every reference to improvement was qualified as either small or scattered. For example, Dallas cited slight improvements residential real estate and staffing firms, while New York noted gains only in a few sectors (predominantly manufacturing and retail). Retail and manufacturing conditions were mixed in Boston, but some signs of improvement were reported. New York, Philadelphia, Cleveland, and San Francisco cited small pickups in manufacturing activity. In the Kansas City District, an uptick was noted in technology firms, while services firms posted revenue gains in Richmond. However, conditions were referred to as stable or flat for business services and tourism firms in Minneapolis and agriculture in St. Louis and Kansas City.

    The weakest sector was commercial real estate, with conditions described as either weak or deteriorating across all Districts. Banking also faltered in several Districts, with Kansas City and San Francisco noting continued erosion in credit quality (often with more expected in the future). One bright spot in the banking sector was lending to new homebuyers, in response to the first-time homebuyer tax credit. Finally, labor markets were typically characterized as weak or mixed, but with occasional pockets of improvement.

    I still like SRS!

    Districts generally reported little or no increase to either price or wage pressures, but references to downward pressures were occasionally noted. While upward price pressures were generally subdued in most Districts, materials prices increased in Cleveland (mainly for steel) and Kansas City. Manufactured goods prices were flat to up slightly in Boston. Boston reported that in some market segments "product competition and customer clout are leading to downward pressure on prices." Minimal wage pressures were noted in Cleveland and Minneapolis.

    Consumer Spending and Tourism

    Consumer spending remained weak in most Districts since the last report, although some improvements were noted. Chicago reported a continued decrease but at a slower rate than in the previous reporting period, and retailers maintained low inventories. Richmond reported flat or declining sales; Dallas indicated sales were largely unchanged. However, Dallas reported unexpected weakness at value-based retailers. Sales were mixed, according to Boston, St. Louis, and Kansas City, with Kansas City citing strong sales of cold weather apparel and lower-priced goods. San Francisco remarked that sales were little changed, with the exception of an increase in furniture sales. Although New York observed weak sales in upstate New York, general merchandise retailers in the City were ahead of plan and same-store sales were roughly on par with a year earlier. Boston noted that large-scale retailers had cut inventory due to weak sales. Philadelphia saw a pickup in back-to-school shopping. Cleveland observed that consumers were very price-sensitive and inventories were lean; nonetheless, sales were flat or slightly improved.

    We already know back to school was good but then evidence shows sales fell quickly after that in the past few weeks.  Notice the spin "general merchandise retailers in the City were ahead of plan and same-store sales were roughly on par with a year earlier."  When your plan is to match last year’s awful sales, you really shouldn’t be celebrating when you are ahead of plan.

    The "cash-for-clunkers" program ended in August, leaving depleted inventories and slower sales in its wake. New vehicle sales declined in New York, Philadelphia, Cleveland, Richmond, Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco. However, Chicago reported a pick-up in vehicle sales in early October. Low new-car inventories helped to move used cars in several Districts, although San Francisco commented that the demand for used cars also weakened. New York also reported that automobile dealers saw some improvement in credit conditions for consumers looking to purchase cars.

    Looking to expectations for holiday sales, Chicago anticipated improved sales, while Philadelphia retailers expected consumers to limit spending. However, Third District merchants also noted that store traffic increased recently. Atlanta reported that two-thirds of contacts expected flat or declining sales over the next three months.

    Tourist activity varied across Districts. Boston, New York, and Atlanta described business travel as extremely soft, whereas Richmond observed solid growth in group bookings. Occupancy rates held steady in New York, spurred by increased leisure visitors, while aggressive discounting boosted cruise-line occupancy rates in Atlanta. San Francisco reported a deep slide in hotel and resort visits in Southern California and Las Vegas, but noted a continued firming of occupancy rates in Hawaii. Richmond indicated overall bookings were much improved over last year, while Kansas City reported occupancy rates remained below year-ago-levels. Room rates continued to decline in several Districts, including New York and Atlanta. In contrast, Boston said that hotels were offering dramatic promotional deals and discounts on local attractions, which preserved posted room rates.

    So big NY, Boston and Atlant are soft but don’t worry as Virgina is doing well.  Hawaii certainly benefitting from strong dollar, would be nice if they differentiated foreign and domestic business.  I know people in England who find it worthwhile to fly to NYC and go shopping as it’s a net savings on the trip

    Nonfinancial Services

    Nonfinancial services firms had mixed reports in recent weeks. Kansas City observed increased demand for high-tech services and Richmond noted generally increased revenues, particularly in telecommunications and healthcare services. Demand for healthcare services also picked up in the Boston District. Minneapolis observed that activity in nonfinancial services firms was mostly flat at low levels, although technology consultants reported an uptick and competition heated up among engineering firms. In contrast, San Francisco contacts indicated that demand for services in general fell, and elective medical procedures were being deferred. St. Louis noted that revenues declined at several large firms in business support services.

    Transportation services activity generally declined, although Cleveland and Chicago reported some strengthening. Atlanta observed weak transportation demand overall, and firms in the San Francisco District indicated that trucking had declined. Import demand in the Dallas District fell, leading to a reduction in cargo volumes at intermodal firms. Activity in the transportation sector was flat, according to Kansas City. In contrast, the cash-for-clunkers program helped to clear dealership lots, which prompted dealers to restock their depleted inventories and drove up car shipments. Chicago reported that trucking shipments increased, although the level of activity remained low, and Cleveland’s contacts cited an uptick in freight transport volume in recent weeks. Cleveland also noted that trucking companies planned substantial equipment purchases through the first quarter of 2010. Business travel by air declined since the last report, according to San Francisco, while airlines in the Dallas District reported stabilized demand--albeit at low levels.

    Manufacturing

    Most Districts reported that manufacturing activity was generally stronger since the last report. New York, Richmond, Minneapolis and Kansas City all noted a further pickup in production, while Philadelphia, Cleveland, Chicago and San Francisco mentioned slight-to-moderate increases. Growth rates varied by industry, however, and some Districts experienced little or no overall increase. Boston reported that manufacturing activity was mixed, but had stabilized or shown modest improvement in certain industries. Similarly, Dallas said overall demand in manufacturing was flat at weak levels albeit with pickups in the high-tech, food, and petrochemical industries. St. Louis indicated that manufacturing continued its net decline, and Atlanta noted moderate declines in orders and production. Some Districts (Boston, Richmond and Chicago) mentioned that year-over-year drops in new orders of housing-related products had abated. Cleveland, Richmond, and Chicago reported substantial increases in auto and parts production, which were attributed primarily to restocking dealers’ and manufacturers’ inventories. Accordingly, lean inventories and stronger demand from the auto sector led to an increase in steel production in the Cleveland and Chicago Districts.

    Way too many things are improved due to Cash for Clunkers, which is over

    Comments on the near-term outlook varied across Districts. Boston, Philadelphia, Cleveland, and Kansas City reported that their contacts expected only slight gains and modest economic growth during the next six months. Therefore, capital spending plans remained subdued, and centered mostly on new product development or cost reduction. Dallas indicated that planned projects and routine maintenance were being deferred to conserve capital. New York, however, reported that respondents were increasingly optimistic about the near-term outlook and expected to hire more workers and spend more on capital.

    Real Estate and Construction
     

    Most Districts reported that housing market conditions improved in recent weeks, primarily from a pickup in sales of low- to middle-priced houses. Contacts reported that sales were boosted by the government’s tax credit for first-time homebuyers. Resale activity also edged up in parts of the New York District, although prices continued to be depressed due to a substantial volume of foreclosures and short sales. New and existing home sales remained flat in the Philadelphia District, and home sales continued to decline throughout the St. Louis District. Sales of higher-priced homes were very slow, according to Philadelphia, Cleveland, and Kansas City. Moreover, real estate agents in the Boston and Cleveland Districts were uncertain about the future of home sales once the tax credit expires. Availability of financing continued to be a concern for potential buyers in the Cleveland and Chicago Districts.

    Residential construction activity remained weak in most Districts. Atlanta reported that construction remained very low, and Cleveland expected new home construction to proceed at a slow pace. Chicago indicated that construction on existing developments edged up, but St. Louis reported that construction activity declined. Kansas City reported that housing starts stabilized, although levels remained well below a year ago and were not expected to improve over the next three months. Philadelphia noted that builders continued to offer increased incentives to boost sales.

    Commercial real estate continued to weaken across the 12 Districts, although even this sector had scattered bright spots. Each District indicated that demand for private commercial real estate was weak, with New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco all characterizing activity as declining further since the last report. An inability to obtain credit was often cited as a problem for businesses that wanted to purchase or build space. High vacancy rates were noted as a key concern especially for landlords who were not offering concessions. And, while industrial real estate in the Richmond District was generally weak, renewed interest by retailers to revisit postponed expansion plans was also noted. Finally, public nonresidential construction activity funded by federal stimulus projects was a source of strength in the Cleveland, Chicago, Minneapolis, and Dallas Districts, but gains were often offset by state and local government cutbacks.

    Banking and Financial Services
     

    Many Districts continued to report weak or declining loan demand, and many noted further erosion of credit quality. For example, demand was reported as stable or declining by New York, St. Louis, and Kansas City. Cleveland noted that commercial and industrial lending was soft and consumer lending was flat or reduced. In the Richmond District, modest signs of improvement in consumer loans were cited from banks in areas typically supported by the health care and education industries. Philadelphia also reported a small gain in consumer lending. San Francisco said that loan demand was "largely stable or perhaps rose slightly." A major exception to the general pattern of weak or declining lending activity was in residential real estate. Most Districts cited the federal government’s first-time homebuyer program as supporting residential lending activity. However, Dallas reported that residential mortgage demand was disappointing, and St. Louis mentioned a moderate decline in real estate lending.

    Credit quality continued to be a problem, and rising delinquencies were often noted. For example, credit quality was described as stable or declining in the Philadelphia, Cleveland, and Kansas City Districts. Half of the contacts for Kansas City expected loan quality to continue to erode over the next six months. Cleveland stated that the quality of loan applicants had deteriorated somewhat, mostly on the business side. Delinquencies were also widely reported to be up; New York particularly noted rising delinquency rates among both consumer and commercial mortgage loans.

    Employment, Wages, and Prices
     

    Labor market conditions were generally reported as weak or mixed across Districts, but a few encouraging signs were noted. Employment activity was soft in the Kansas City District, and hiring remained limited in the Boston District. While a slowdown in layoffs was reported by Atlanta, no hiring was generally expected. Reports from Cleveland were mixed, but indicated declining employment in commercial construction and coal mining. Employment levels held steady in the Dallas District, with scattered reports of layoffs. However, staffing firms there noted improvement in contract and temporary employment. Minneapolis reported a weak labor market, but some signs of improvement were noted among auto-related industries. A major New York employment agency specializing in office workers reported renewed softening in recent weeks, with only scattered hiring at financial institutions and virtually no hiring in the legal and publishing industries. Richmond noted reports from temporary employment agencies were evenly mixed between reports of strengthening and weakening, but with increased optimism for the near term expressed since the last report.

    Wage and price pressures were generally described as subdued across most Districts. Wages were flat in the San Francisco District, but increased moderately in the Minneapolis District. In the Boston District, business services firms (mainly advertising and consulting) reported modest salary increases, but a decline in bonuses left total compensation slightly reduced. Wage pressures were characterized as "not significant" in the Chicago District and "contained" in the Cleveland District.

    Prices followed a similar pattern to wages, with reports of little significant pressure on either input or output prices, although moderate increases were observed for materials prices. For example, prices movements were characterized as generally subdued or little changed in the Philadelphia, Atlanta, and Minneapolis Districts. Cleveland noted stable construction materials prices, but added that the cost of steel had experienced an uptick. Materials prices in general were reported to be up in the Kansas City District. Boston said that selling prices of manufacturing goods were flat to slightly up, but noted that product competition and consumer clout was leading to downward pressures in some market segments. Retail price inflation slowed slightly in the Richmond District, while retail prices were stable in the Philadelphia District and edged down in the Chicago, Kansas City, and San Francisco Districts.

    Agriculture and Natural Resources
     

    Assessments of agricultural activity were mixed. Reports from Richmond and Minneapolis indicated that favorable growing conditions allowed farmers to make steady progress in harvesting summer crops and planting winter crops. In some parts of the Minneapolis District, however, a persistent drought delayed harvesting. In contrast, Atlanta, Chicago, St. Louis, and Dallas Districts all noted unusually high amounts of rainfall. In the Atlanta District, floods damaged some of North Georgia’s nurseries, vegetable farms, and commercial vineyards, but benefited Florida citrus growers. Similarly, widespread rains brought much-needed relief to drought-stricken parts of the Dallas District, allowing many ranchers to scale back costly supplemental feeding--but not in time to prevent severe losses to livestock and crops. Chicago and St. Louis mentioned that wet weather had slowed crop maturity and harvesting, while Chicago reported lower than expected yields. Kansas City indicated that, despite some delayed harvests, farmers expected above-average yields.

    Activity in the energy industry remained weak. Atlanta, Kansas City, Dallas, and San Francisco reported increases in oil and gas inventories as demand continued to weaken. Atlanta indicated that refining margins continued to deteriorate, which led to delays in new projects. Cleveland noted that sharply lower contract prices for coal prompted coal miners to continue their deep cutbacks in production and to keep their capital spending on hold. Kansas City mentioned that overall drilling activity improved slightly, but that rig counts were still at historically low levels. Dallas remarked that rig counts rose in September and early October, spurred by oil drilling. However, Dallas also indicated that, despite the increase, excess capacity in the industry had resulted in job losses and weak domestic pricing. Minneapolis reported that activity in the energy and mining sectors increased slightly and noted that oil and gas exploration inched up in late September.

    Overall, this is BETTER than the last BBook but still not very exciting.  It looks from market action that investors have mixed feelings about it but none of this matters with the Euro now over $1.50 and the Pound at $1.66.  At least we are holding 91 Yen so I guess we’ll all go to Japan for vacation


  96. Cost for that trade .50


  97. Insanity, plain and simple….Americans better wake up…
    OKLAHOMA CITY (Reuters) – A $29 billion trail from the Federal Reserve’s bailout of Wall Street investment bank Bear Stearns ends in a partially deserted shopping center on a bleak spot on the south side of Oklahoma City.
     
    The Fed now owns the Crossroads Mall, a sprawling shopping complex at the junction of Interstate highways 244 and 35, complete with an oil well pumping crude in the parking lot — except the Fed does not own the mineral rights.
     
    The Fed finds itself in the unusual situation of being an Oklahoma City landlord after it lent JPMorgan Chase $29 billion to buy Bear Stearns last year.
    http://www.reuters.com/article/newsOne/idUSTRE59K01420091021

    After all these months I’m still amazed at how easily they can manipulate the markets

    VZ lets see if they can break that 29.10 resistance


  98. GS looks like it is heading into oversold here – are we  still bearish this name?


  99. ICE is smoking the ICE.  I mean, wtf?


  100. Phil
    I am looking at Skechers (SKX) for a trade into the earnings. The stock is valued richly and may meet expecatations, however, the downside risk is higher if they merely meet.
    I was looking at a BEAR CALL trade Selling the NOV 20′s against the DEC 22.50′s. Do you happen to have any opinion on this one? 


  101. Recovery is "far from assured" for GM and Chrysler, says former auto task force chief Steven Rattner, who said in a Fortune piece that he was "shocked by the stunningly poor management we found," especially at GM.  Shocked?  Really Steve?  Why, because they were doing so well???

    Steel/Kustomz – That’s strange, I was just reading there was a global glut but maybe they supply steel to Chinese car makers….

    CAL/Morx – I do the one roll then double it as I always think I’m getting ripped off if I try to do it as a spread.  It’s very hard to get the system to quote you a good price on a split. 

    CAL/CMC – No reason other than selling the $13 puts for $1 is great.  Do I want CAL for net $14?  Yes.  Would I DD at net $12?  Yes.  Therefore, I sell 2x the $13 puts for $1. 

    2x/EMC – Yes, it’s a roll to twice as many as you had. 

    Earnings plays/Balance – I’m a little pissed off about this run today but I’ll see if I can get my head in the game in the next 30 mins. 

    Coke and Strippers/New – Finally an explanation for what Madoff did with $50Bn!

    Volker/Matt – You are right, he is wasted but maybe they are waiting for phase 2 of the collapse to bring him in. 

    EBAY/Wii – I would like it better if you bought the Aprils, not Dec. It puts you behind 2 more earnings so you should keep most of your premium and plenty of room to adjust. 

    Crossroads/Kustomz – Yes amazing.  They stripped the working asset and sold the crap to the Fed (us, in fact). 

    GS/Steve – Too dangerous to fight.

    ICE/Matt – Insanity but I’m willing to stick with them as regulation is breathing down their neck.

    SKX/Chakra – They beat the the last 2 Qs by a mile so I would just stay away.  I agree with the logic but logic does not matter at the moment. 

    Abnormal Returns looks at the charts our pattern-seeking brains love, and the temptation to use them to forecast the future – especially in the case of Doug Short’s "Four Bad Bears" chart.


  102. Thanks for the summary Phil. That report isn’t just unexciting, it’s terrible.
     
    Shorting anything commodity-related is crazy right now, but the REITs do not have bullish chart formations. They have all largely flatlined, and while they could break either way, on both a chart and fundamentals basis they still seem like one of the best shorts in an incredibly risky environment for short positions.


  103. Phil,
    Assuming we close here (1098), any feel about the open tomorrow? Initial claims at 8:30, leading indicators at 10:00.
    Maybe a gap up on only 6 or 700,000 jobs lost ?


  104. Regarding ICE, didn’t the CFTC say something this week about not doing anything? I think Phil or someone posted it here. As far as I can see, they are green-lighting another commodity run.


  105. Phil / ICE:  what really pisses me off is that it’s simply being driven up by the MMs.  First, the volume today is really low.  Second, what volume there is is about 80% intermarket swaps and not normal trades which means the MMs are handing it back and forth to each other.  They are marching it right up with no sellers in sight.  Oh look, there IS a seller.  About 5 of them and it’s enough to drop the price by $.5 in the blink of an eye.    Gotta stop trading the thing.  It’s another one to go on my list.


  106. Talk about a mindless idiot on CNBC:
     
    I THINK the consumer is spending; they can’t help themselves ( no data to support this)
    I THINK money will come off the sidelines towards the end of the year to drive the market higher (again NO DATA supports this).
     
    This guy is just making stuff up even though the data is clearly against him.
     
    Get this shmo off TV !!


  107. Feds, well how can you not be bullish when the Fed is buying all the toxic assets. Seems to me they’ve solved the dilemma. The worst in unemployment and the housing market collapse is clearly behind us. Now the these guys can focus on what really important, profits and bonuses.

    CAP after yesterday’s interview with AG Brown, i decided to switch to bloomberg.. lot less aggravating

    GS clearly not going to take the role of saviour today, 1090 here we come


  108. Phil,
    DOW (Dow Chemical) has reallly fallen since 2:30 with earnings tomorrow. Any thoughts on this one?  Damn with oil and pound going crazy its been a really bad day to be short BP.. DD


  109. AMZN getting smacked around – probably by WMT


  110. O lord guess it wasnt gas after all, at this rate we may sell off into the 1080′s


  111. Phil you are you covering MS naked calls befor eeod….


  112. At these levels we should be seeing much higher volatility


  113. bit of weakness here. Leaked jobs report? lol


  114. Chakra/SKX…..I saw Phil’s comment on this but I couldn’t resist a very small bet that they go down after earnings.  If they stumble at all, they will be punished.  I’m only risking a 0.1% portfolio bet on this one.  I think it’s more for my entertainment than anything else.  Nov 20 puts.


  115. REITs/Eric – Yes, if I had to go with just one short play it would still be SRS.  Everything I’ve seen and heard in CRE spells pending disaster and I simply can’t believe how the markets can just keep playing along as if it isn’t going to happen

    Open/JRW – I think jobs are getting worse again but the way they’ve been messing with things, anything goes.  Fortunately, I don’t have to worry about us closing at 1,098 because now the volume is pouring in to the downside and all the idiots who’ve been buying all day are getting very confused.  Maybe they can get Cramer on again in the next 5 minutes to remind people to keep buying…

    CTFC/Eric – I did see that but that’s not what’s going to happen.  There are dozens of different bills in process looking to put a stop to their kind of shenanigans and all this negative press on GS is going to lead right to their door as well.  I won’t play for an endless commodity run because people simply can’t afford it.  If you want to see this economy fall off a cliff just push gas back to $3. 

    ICE/Matt – You have to have faith.  Look at it as a long-term scale where you’ll be short 4x at $130.

    CNBC/Cap – You have to be more specific, so many schmoes on CNBC…


  116. Morningstar notes percolating interest in ultrashort-bond funds: net inflows to the tune of $9B.

    The government will reportedly order deep pay cuts from the biggest bailout recipients in a plan the Treasury will announce in the next few days. The seven companies that got the most assistance will have to cut cash payouts to their top 25 execs by an average of 90% – to be replaced by stock that they’ll be restricted from immediately selling – and cut their total compensation by 50%.


  117. Dear Phil,
     I am a little confused. My broker is ToS (thanks be to you) and when you say you filled the spread for .40c – I understand you bot a 9 and sold a 10 – but when you say you would have been thrilled to sell the spread to me for .65c I am lost. Because I too bot a 9 ( for 3.20) and sold a 10 (for 2.95) – are you saying that ToS must have been mad at you and thrilled with me.

    All I expect is to make a profit by selling at a higher price than I bot and buying back at a lower price than I sold for and/or being called away in April at 10 and exercising at 9.


  118.  ICE / CME…
     
    …DJ reports the CFTC should "set the bar high" when it sets new limits on speculative trading activity in commodity markets…start with high limits in order to establish a system for enforcement without pushing trading overseas or off-exchange, Bart Chilton, a commissioner with the CFTC, says…"Limits should probably be on the high side at first, so that we can get a feel for how they affect all the active participants," Chilton plans to say. "We may get it right and hit the bulls-eye on the first try--if not, we can and should readjust. But in the first instance, I want to make sure we do no harm." In an interview, Chilton said the CFTC should set limits well beyond the vast majority of traders’ positions, and could then elect to ratchet down limits in markets where the agency sees speculative activity as having a detrimental effect. In his speech, Chilton will also advocate for the CFTC to take over granting exemptions to trading limits from the exchanges. An exemption should be granted only when "tailored" to "legitimate business risks" in cash and physical markets, he plans to say. Chilton said he hopes to see a proposal released to the public by late November. (Related stocks: ICE, CME)


  119. Man they use all the tricks in the book on ICE.  I put a bid in at 108.36 to cover half my short position and it went through right away.  The trick is the bid was 10 cents higher and my trade didn’t even show up on Level II as having been executed.  How is it that they can do this?  Level II is worthless for this thing.  Actually most things.  It’s a deceptive indicator at best.


  120. oops i meant I bot a TZA at 9 (for 3.60) not 3.20


  121. vix was getting too low


  122. Phil / ICE:  woah, 130 QD?  I don’t think I could weather that storm. 
     
    What a crazy day.  Look at those wicks.  Wicks everywhere!


  123. DOW/Boonie – Same as DD and APD, they may spike up but ultimately sell off.  Selling the $25s for $1.80 is fun and you can cover it with the Jan $27s at $1.65 but screw them I say.

    MS/Magret – No it was just a naked call sale.  I believe in my valuations when I pick those trades, that’s why I have to sit here and calm everyone down when they go the other way.  You get the good prices by selling when the stock is going up, not down but then you don’t always hit the perfect turn and you have to be prepared to deal with that – otherwise, selling calls short is certainly not for you…

    TZA/Red – No, I thought you said you paid .65, which would have been way too much.  .35 is fine and, as I said, you should offer to sell for .50 in case a sucker comes along.  I’ll telll you what’s really annoying with TOS, they show those two contacts marked at $3.60 and $3.40 so a 50% loss on their books at the moment but offer to buy some for that price and there is no way. 

    ICE/New – Thanks, I feel better…

    ICE/Matt – I was just talking to the guys at WSS about that.  They are trying to make their executions more accurately reflect the market and they can’t believe the BS that goes on when you actually stop and take a look at things.


  124. what are thoughts on these broken levels? Get agressive on some shorts before the close?


  125. Phil, do you see anything between now and tomorrow with the potential to shoot futures up after hours and/or premarket tomorrow? I bought a bunch of DRV before it shot up like a rocket the past hour. I’ve been burned holding these 3x ETFs overnight in the past but with jobless claims coming up tomorrow the market can’t get too excited before 8 am right? Im just hoping to hold out and sell tomorrow for an even larger profit….


  126. Any opinions on RTN 45/46 for about .48 into earnings?


  127. This must be that hedge fund liquidating.  Something is upsetting the bulls apple cart!


  128. Any opinions on RTN 45/46 for about .48 into earnings?


  129. We’re looking like September 23rd right now.. With an open up tomorrow followed by more selling.  I’m standing pat until tomorrow  between 10 and 11.


  130. Phil,
    So now, follow through gap down as a buying opportunity or just buy more TZA ?


  131. How about that FAZ play this morning!\

    Earnings plays:

    • EBAY Jan $26s for $1.35, selling Nov $25s for $1.30.
    • FNF Dec $15/17.50 bull call spread for $1.10.

  132. Dirty Dick!!


  133. matt it was clear earlier this afternoon that they couldn’t get a rally going with every push up. This is just a way to get people on the side lines in. If they can stick 1085 that would be great.


  134. Wow, can’t a guy go for a short walk? Last trade I put on was a VNO short just after posting that thing about REITS above, heh heh.
     
    newparadigm, thanks — yeah that’s the meaningless, pro-speculation talk I remembered reading.


  135. All i have to say is wow, who in their right mind would step in front of this…someones (PPT) desperately trying to keep the wheels on the wagon


  136. Wow.  Looking at the last month dailies for the spx and today is the first day we’ve closed at the low.  Pretty remarkable.  I love to say this means something but I’ve been brainwashed into thinking anything can happen from one day to the next so I’m not going to say it.  A good jobs report could turn us right back around.


  137. Sorry but that sell-off came right before I would have had a bunch of bearish calls to make. 

    Potential/Jrom – Obama is saying something, that’s always a wild-card and the big deal for the week is China’s GDP tomorrow.  They could upgrade it but maybe this market action is because someone heard they were downgrading…  If you are not going to follow Rule #1 (ALWAYS sell into the initial excitement) then at least follow Rule #2: When you are in doubt (or a greedy bastard), sell half. 

    RTN/Blair – I think earnings will be good but I’m not sure if they are going to be able to give good guidance as many contracts are up in the air.  You are just spinning the wheel on a 50/50 bet. 

    Follow-throug/JRW – Depends on China and Jobs.  I’m not pressing now – just thrilled that today’s bets are paying off (you guys were getting me worried with all the freaking out).

    Nice .50 move on SRS!  Gott love them (when you are not hating them that is…).

    Volume 242M – once again volume = DOWN!

    Well that was great fun, now I’m not at all sorry I was bearish all day but we’ll see if that lasts more than 12 hours.


  138. Bob Pisani said it earlier today.  There has been a big outflow of domestic mutual funds this month.  A small inflow for developing market mutual funds.  And a huge inflow in bonds.  People are locking in their gains.  And they say mutual fund investors are dumb… that’s what happens when you build a huge rally on nothing.  Even mutual fund holders can figure it out.


  139. Still selling off hard AH. Does anyone still listen to Bove? LMAO if he was the straw that broke the camel’s back this afternoon. Glad I got out of SPY longs this earlier this week; this is just what I was afraid of.
     
    BIDU momentum longs got burned — again!


  140. Well that was interesting…


  141. Oh.  This supposed to be all because Wells Fargo got downgraded by Dick Bove.  He wishes he had that kind of power!


  142. Bang, bang, bang!  That’s my head against my desk just trying to get the thought out of my head of a robust Autozone report sending us back over 1100!  LOL


  143. Hi, All,
    Are AGNC and NLY having similar business models?  I.e., making money on mortgage based securities, instead of actually owning real estate properties?
    If they are sufficiently similar, do you suggest diversify a little bit by investing in both AGNC & NLY?  With the rationale that one company may be doing a better job than the other?


  144. Well, that was fun…. what the hell happened ?


  145. Phil, Do you have an opinion on the product ThinkorSwim?


  146. Cap, your guess is as good as anyone elses.  Mine is that a big fish wanted out.  I think there are more fish now that want the same!
     
    thompson, he likes them enough to use them himself.


  147. cwan: NLY is 10 times the size of AGNC & a whole lot less riskier. I have had NLY for 18 months  & most price appreciation has been had,but hollding for dividend which is great.
    NLY dividend yld currently 15.82  & very solid.Has options but not worth selling. When mortgage rates start to go up,get out of both since their costs will go up.
    dflam


  148. Here is my man Volcker:
     
    He wants the nation’s banks to be prohibited from owning and trading risky securities, the very practice that got the biggest ones into deep trouble in 2008. And the administration is saying no, it will not separate commercial banking from investment operations.
    “I am not pounding the desk all the time, but I am making my point,” Mr. Volcker said in one of his infrequent on-the-record interviews. “I have talked to some senators who asked me to talk to them, and if people want to talk to me, I talk to them. But I am not going around knocking on doors.”
    The Obama team, in contrast, would let the giants survive, but would regulate them extensively, so they could not get themselves and the nation into trouble again. While the administration’s proposal languishes, giants like Goldman Sachs have re-engaged in old trading practices, once again earning big profits and planning big bonuses.
    Mr. Volcker argues that regulation by itself will not work. Sooner or later, the giants, in pursuit of profits, will get into trouble. The administration should accept this and shield commercial banking from Wall Street’s wild ways.
     
     
    So.  There it is.  The smartie pants young  whipper snappers are saying no to the man who saved us from run away inflation.  They think they can regulate human nature.  They can’t.  This is what I’ve been afraid of happening.  Someone of huge stature, who just so happens to agree with me (not so huge stature), saying the banks should be split up and the big government Democrats are saying ‘no’ we can have our cake and eat it, too.
     
    I’m done.  I’m no longer a supporter of Obama’s.  He is playing a fool’s game. 


  149. Me neither; I am no longer a supporter of Obama …
     
    :wink:


  150. Woooo Palin/Limbaugh 2012!


  151. Funds/Matt – Note the 3:27 news I bolded from Morningstar – $9Bn of inflows into ultra-shorts.  That was a good cofirmation that something was up!

    Man, if you combine a move like that with a panic into the dollar, this market will melt so fast your head would spin!  Whatever you do, make sure you have some catastrophic hedges in your portfolio! 

    BIDU/Eric – Like I said yesterday, it is amzing how many times they can get people to fall for the same move on the same stock.  Of course BIDU doesn’t hold a candle to FSLR, who is like a cash milking machine at the top of thier range! 

    AZO/Matt – LOL!

    NLY/Cwan – I looked at them and decided that AGNC was a better deal so they made the watch list.  While it’s reasonable to split the two, they are still going to trade pretty much in lock-step and if one fails, the other will be punished by proxy so don’t delude yourself that you are diversifying by owning both.  Dflam makes a good point, both will get far less attractive as rates go up.  

    What happened/Cap – Well according to CNBC, everything would have been great if Dick Bove hadn’t downgraded WFC.   That broke the entire market!  That’s like your house collapsing due to a structural defect and the builder finds some crayon your kid put on the wall and says "Well THERE’S your problem!" 

    Later we will hear that this was all caused by that hedge fund shutting down or some other nonsense to bring the sheeple back to the market… 

    TOS/Sthom – Oh they are great.  I couln’t go back to OXPS.  The order system is great, tracking is great, charts are nice and customer service is excellent. 

    Oh no Cap – how did we lose you?!  8-)

    Bove says the quality of Wells Fargo’s (WFC -5%) earnings was ‘pretty poor’: "If you take a close look at the earnings, what you can see is that the improvement is due to a hedging profit made on the mortgage service portfolio, about $3.6B. You can also see that they cut their tax rate." (previously)


  152. NLY vs AGNC / dflam & Phil: Thanks!


  153.  Phil,
     
    "The Warning" on PBS tonight could be a game changer.


  154. people watch PBS ?


  155.  Phil, I’m still shaking my head. I bought SRS calls at .90 shortly before they jumped 38%.
    I plan to buy as SRS goes down. There will be a payoff.


  156. NO NO NO, you guys are looking at all the wrong reasons why this market went down, Lets be serious, your telling me with all the headwinds we have faced (facing) the market should be at 10k. NO of course not. News has nothing to do with the markets movement. Its all about levels and breaking them….simply we hit 10117 on the 19th and we hit 10119 today without any follow through. Traders waited for the afternoon pump that failed and hence the sell off, don’t kid yourself that we went for any other reason.
     


  157. someone dumping SPG after hours….


  158. oldgoat should be interesting, they’ve been advertising all week on YouTube…too bad they didnt cancel dancing with the stars im betting 6 people will watch it


  159.  maybe it was galleon unwinding their funds…


  160.  Kustomz,  Could you explain your message? I don’t get it.


  161. I know some of you will role your eyes and say, "figures" but I love PBS.  But I hadn’t hear of that program so I will definately check it out.  Thanks you oldGoat!


  162. Sorry oldgoat, PBS has been advert sing the program on youtube. The dancing with the stars comment points to the fact that most Americans could care less and would rather watch dancing with the stars hence the 6 people that will watch PBS this evening, so far you matt and I account for 50% of viewers ;-)


  163. Phil, what say you on some near term BIDU calls?? Everybody is expecting this thing to rise after earnings report like Google. 


  164. The Warning/OldG – Perhaps people will ask themselves if it can happen again and realize: "Of course it can, we’ve done nothing to prevent it."

    SRS/OldG – Wasn’t that a good thing?

    Down/Kustomz – We went down because this market is built on a low volume house of cards (see my car lot model) and it takes nothing at all to knock it down.  Should anything serious happen, people will discover how truly difficult it is to get even 75% of what they think their stocks are worth.  Of course, we knew it was trouble at 1:03 when all 4 Fast Money idiots said they’d be buying into the close…

    LOL, AAPL flushed stops to $198.76 after hours – Cramer may as well just bend his viewers over his desk and rape them on TV – Booya! 

    With unemployment headed for 10% (or 16%, if you want to include part-time and discouraged workers), Derek Thompson looks over the merits of a couple of job creation proposals: a hiring tax credit vs. a payroll tax holiday.


  165. I see an after hour quote for AAPL at $205.15.  So what does "AAPL flushed stops to $198.76 after hours – Cramer may as well just bend his viewers over his desk and rape them on TV" mean?  Sorry – a newb i am.   


  166. LMAO booya!

    Phil i was simply stating the fact that the markets pay no attention to news. Good way to flush out the weak hands for  next leg up. Simply look at the Dow chart over the past 3 months, with every rise theres a quick dip then the next step up. Im not sure if the next step will be completed but im sure they are going to try regardless of news.


  167. Phil, that’s right!  I’d forgotten all about your Fast Money comment.  It didn’t really strike me as contrarian at the time because I was battling an ICE fire at the time and anything seemed plausible.
     
    So what the hell did they have to say for themselves on the show tonight?  I’m still at work and can’t watch.  You know they are ‘in’ on the game but boy, they’ve got some serious ‘splaining’ to do!
     
    Kuz, I think the oldGoat was referring to your earlier comment about why we sold off today and why it doesn’t mean anything out of the ordinary.


  168. lol matt im sure og was referring to my dancing with the stars comment, but i can clearly see that your stumped by the comments. I have held on to the belief they take the markets to current levels, but why stop here? There would have to be some very very damaging news to send us into a free fall. With the Gov and the Fed pulling out all the stops and liquidity up the wazoo i have to be realistic and remember that people are greedy by nature.

    CNBC pulling out the stops to comfort the retail trader.


  169. Well it could have been Galleon unwinding and buying short triples to profit from their crisis; not much technical damage. I agree with kustomz, we’ll be higher next week, the question is how to play tomorrow. And we won’t know that untill about 9:00.


  170. LMAO i was wondering what was holding HCBK up today after earnings and during the sell off, well well well JC will have the CEO on Mad Money tonight

    Transports got creamed today, if someone from the Fed talks up the dollar (for a change) i would look for some gains in that sector


  171. this is taken from HCBK earnings summary
    Through the first nine months of 2009, we sold 40 foreclosed properties. It is currently taking up to 30 months to foreclose on a loan once it becomes non-performing.


  172. Through the first nine months of 2009, we sold 40 foreclosed properties. It is currently taking up to 30 months to foreclose on a loan once it becomes non-performing
     
    30 months?  They have got to be kidding..
     
    Kuz, I, too seriously doubt we’ve topped.  They’ve proven they don’t need a catalyst to slam on the brakes and go back the other way.  I think drops come as a shock because we’re lulled into the thought of a steady market by its action.  It’s funny how quickly the world must be coming to an end when we drop quickly for any length of time.  It’s a more intense feeling then going up for me.  Both of those make for good bear traps.  Just the same, I think we’ll be down tomorrow after opening higher.  If I’m wrong, then I think we’ll be shooting up again to new levels.


  173. 30 months matt, i call that cooking the books my friend


  174. Phil
    Thanks for the guidance re your thoughts on X and steel in general….. sold with a terrific profit.. I still maintain a substantial position in PKX (Posco), and am staying the course with it on a long term basis, This 35 Bil company in Korea announced a Q to comparitive Q of a 50% operating profit increase, and an increase of 10.5% increase in sales. It appears there is demand for steel in Asia that may not exist elsewhere. My feeling the increase is primarily China demand, an it will probably continue.


  175. Wow.  I just watched The Warning on the PBS website.  The show wasn’t on the station here tonight.  I’m blown away.  How on earth can Obama be considered an agent of change with the cast of characters he has around him right now?  Summers, Geitner and Bernanke.  Rubin and Greenspan should be pilloried.  Greenspan was right.  The markets always do correct.  In this case, they should have corrected these dumb ass companies out of business.  Too big to fail companies and free market economies are diabolicaly opposed to each other.  Since we are stuck with them, they need to be split up and regulated seperately.  And derivatives need to be outlawed. 
     
    How is it that if I have $5 billion dollars and then go out and write contracts worth up to $1 trillion against that $5 billion it’s called ’leveraging’ and not FRAUD?


  176. I missed it but its on their website….pbs frontline
    http://video.pbs.org/video/1302794657


  177.  Comcast has "The Warning" available on demand


  178. This should inspire confidence in our elected officials:
     
    Democratic Sen. Claire McCaskill apparently believes that a healthcare public option would apply only to those who are currently uninsured.  She posted this brilliant thought to her Facebook and Twitter pages.
    http://twitter.com/clairecmc
     
    "I’m not sure that everyone understands that a public option will only be available to those who don’t have insurance coverage, not everyone."


  179. Scary …


  180. Galleon funds are facing redemptions and have $3 B to liquidate. I am suspecting that this sell off had something to do with that.


  181. If you have any doubts that the Gov is controlled by the power elite in this country then you need to view this program. The Warning on PBS.


  182. HONG KONG, Oct 21 (Reuters) – Jiangxi Copper (0358.HK), China’s largest integrated copper producer, said on Wednesday its quarterly earnings fell 46 percent due to lower copper and sulphuric acid prices.
     
    Copper prices continued to rebound in the third quarter on strong China demand and has roughly doubled since the beginning of the year, but on average remain below levels of the same period last year.
     
    Jiangxi Copper (600362.SS) reported net profit for the July-Sept period of 560.94 million yuan ($82.18 million), down from an adjusted profit of 1.04 billion yuan a year ago, based on Chinese accounting standards.
     
    The company is set to benefit along with the recovery of copper prices, driven up by China’s 4 trillion yuan infrastructure-focused stimulus programme.
     
    Shanghai copper prices rose to near six-week highs on Tuesday helped by a weak U.S. dollar. Shanghai’s benchmark three month copper SCFc3 rose 18 percent in the third quarter.
     
    Analysts forecast Jiangxi Copper will post a yearly profit of 2.63 billion yuan — up 15 percent — according to a survey by Thomson Reuters I/B/E/S. That suggests the company may record higher profits in the fourth quarter.
     
    Panic selling amid the global financial crisis caused a global copper slump in the second half of last year that saw copper prices beaten down from record highs to three-year lows. The metal is used heavily in power and construction.
     
    Jiangxi Copper said its turnover fell 14.5 percent in the third quarter to 13.05 billion yuan.
     
    For earnings table please read [ID:nHKG213976]
     
    The firm aims to make 800,000 tonnes of copper in 2009. It said in September it planned to expand annual capacity of refined copper by more than 10 percent to 1 million tonnes by 2012. [ID:nSHA202169]
     
    Jiangxi Copper’s share price has risen 37 percent in the third quarter and closed up 0.2 percent at HK$18.90 on Wednesday.
    http://www.reuters.com/article/basicMaterialsSector/idUSHKG21012520091021


  183. we’re all peasants lol you ll never see this on CNBC
    http://www.youtube.com/watch?v=pFMgwL-Tq4s


  184. FAZ: Phil, I’m in an FAZ  buy/write with Nov. 18 puts and 21 calls. I have a 50% profit on the puts and about a 30% profit on the calls. I’m thinking of closing out both until I see which way the market is headed. Do you think that makes sense or should I roll out to Dec options with perhaps a wider spread: 17 puts and 22 calls for $3 premium?


  185. I have been watching the futures rise in the face of an Asian sell off and European futures are down


  186. Peasants he says!  That was lively.  Now I don’t need that coffee… uh, yes I do.


  187. Peasants- "banks are stealing money" – so, this is something new?
    http://wiki.answers.com/Q/Where_in_the_Bible_is_the_story_of_Jesus_and_the_money_lenders


  188. Good morning!

    Back to shenanigans.  Dollar was run up all through Asia’s session and then started a big reverse at 5am. 

    BIDU/Lolo – My only interest in BIDU calls is selling them to suckers when the stock runs up too high.  IF their earnings come in as expected this Q (20% better than last year) THEN they are on tract to earn $6 for the year, which puts their p/e at 68.  IF they manage that and grow at the projected rate of 50% next year, their p/e will be 45 and that will be 125% higher than GOOG’s forward p/e of 20.  Buying BIDU over GOOG is like going to a car dealership and seeing a brand new Mercedes SL for $55,000 (too little) and a Chrysler Seabring for $41,000 (too much) and choosing the Chrysler becuase it’s "cheaper."

    AAPL/Lolo – Flushing stops is when someone dumps a few shares at a really low price or buys shares for a really high price to trigger stops that traders left on overnight.  You can use this tactic to gather a little market intelligence as it can give you an idea of how many trades are out there and sometimes it even sets off a wave of buying or selling. 

    News/Kustomz – I’m wondering if we may be entering a hand-wringing phase again.  Possibly spurred by the elections as the minority party has a vested interest in talking about how poorly things are going. 

    Fast Money/Matt – Oh, I don’t know what they said as I don’t watch the show unless I happen to be sitting at my desk.  That show has gone way downhill, I used to like it when Dylan was on but now it’s just a bunch of people talking their books and paying no attention at all to the facts.

    Drops/Matt – Taking those quick 20% gains is the way to go.  Until we actually get a drop that goes on for more than 2 sessions it’s best to be a non-greedy bear.

    Steel/Gel – Yes I think that the China car market as well as the fact that the Chinese government is building new buildings even though old buildings are empty is supporting local suppliers but just watch out if there’s a turn as there is a serious underlying glut.  China doesn’t need to allow a turn though, they have no national debt and they have a couple of Trillion in cash so they can spend $1Tn a year (20% of the econonomy) for 7 years before their debt to GDP even touches our current level. 

    Warning/Matt – While I appreciate your outrage, you need to note the absolute lack of concern in the MSM.  Whether it’s a conspiracy or just that no one cares, I suggest you put it out of your mind…

    Keiser/Kustomz – That’s a good video!  This is the opposite of CNBC – a strong bank critic and a weak bank apologist…

    I found a video of Fast Money’s beginning and, what do you know, they call in Cramer as a "special guest" to get the troops back in line. Of course, there is not a word about their strong afternoon statements.  Najerian actually has the balls to say that YOU had clear indications at noon that the market was heading lower by watching GS – how come he didn’t know that at 12:30 then?  They even had a guest who wisely said "How can the consumers afford to shop with $80 oil?"

    FAZ/Allen – I agree with taking out the puts for sure.  It would have been nice if you followed the 50% rule on the calls earlier but 30% is still a nice profit to take, especially if your intention is to simply reposition after the next move.  Of course, you are well on your way to making 100% on both sides so just make sure you have a good reason for NOT waiting out 70% + 50% more profits.

    Peasants/Matt – I think that reference goes over the head of most Americans, who have little sense of history.  It’s too bad because he makes great points but, like Hugh Hendry, he goes over the heads of most of the American audience so they are simply ignored by the MSM. 


  189. Phil,
    Are you still OK with the long spread on C Jan 2011 5/7.50 or should I get out of it.?